MEMO / NOTE DE SERVICE

To / Destinataire
From / Expditeur
Subject / Objet

Mayor and Members of Council

M. Rick OConnor
City Clerk and Solicitor
Rideau Street Infrastructure Failure
Update

File/N de fichier:
Date: 22 December 2016

The purpose of this memo is to provide you with a year-end update on matters
regarding the infrastructure failure (the sinkhole) that occurred on Rideau Street
last summer. This update includes confirmation that the Citys external experts have
concluded that the sinkhole was not caused by a failure of the Citys infrastructure,
and provides information with respect to how the parties responded to address the
issues resulting from the incident, as well as identifying actions taken under the City
Managers delegated authority.
At the outset, I can confirm that steps have been taken to ensure that the
Confederation Line Light Rail Project (the Project) remains on track for revenue
service in 2018. As you are aware, Rideau Street reopened to pedestrian and bus
traffic on December 15th, 2016, marking a significant step in the completion of work
associated with the event that occurred on June 8 th, 2016. The Rideau Transit
Group, in collaboration with the City, has undertaken a number of remedial actions
that ensures the remaining tunneling is scheduled to be completed by the end of
February 2017 and the final lining of the tunnel is to be in place by the end of July
2017. RTG has adjusted its workplan and committed additional resources,
including more personnel, more equipment, extra shifts and additional work with
their subcontractors, to ensure that the overall construction schedule is maintained.
Currently, RTG has advised the City that it has less than 10 metres of tunneling to
complete.
As Rideau Street reopened, the Citys external experts provided the results of their
investigation into the sinkhole. This investigation was initiated to determine to what,
if any extent, the Citys infrastructure caused or contributed to the collapse of the
roadway. As Members of Council will appreciate, the sinkhole was a complex
event. The effort to find the cause of the sinkhole was further complicated by the
fact that the need to quickly secure the site and stabilize the area of the collapse
required filling the sinkhole with more than 3,000 cubic metres of concrete within 24
hours of the incident. In light of these circumstances, the Citys external technical
experts were unable to pinpoint a singular cause of the event, but are confident,
based on their analysis of all the available evidence, that the sinkhole was not

precipitated by a failure of City infrastructure. As described later in this

memorandum, the report from the technical experts, known as the Root Cause
Analysis report, cannot be made public at this time, but Members of Council may
make arrangements with me directly for viewing.
With respect to the Citys contract with RTG as it relates to this event, following the
infrastructure failure, the City and RTG entered into what is known as a Standstill
Arrangement. Such an arrangement, drawn from the law regarding financial and
commercial matters, is essentially an understanding between two parties to a
contract to maintain the status quo. In this case, the Standstill Arrangement
enabled RTG to focus its attention, resources and energies toward remediating the
sinkhole, without triggering any of the formal written notices for delay and/or
compensation that would otherwise be required under the Project Agreement.
Ultimately, the rapid speed of this rehabilitative work allowed local properties and
businesses to reopen shortly after the event, thereby mitigating any external claims
by those affected by the sinkhole.
As noted earlier in this memo, the around-the-clock injection grouting that had been
undertaken by RTG over the last few weeks facilitated by the closure of Rideau
Street has allowed tunneling work to progress to the point that it is expected that
it will be completed by February 2017, at about the same time that the Standstill
Arrangement is set to expire and the preliminary response from the Project insurer
is anticipated.
With respect to insurance claims resulting from this event, I can confirm that there
are approximately 31 claims for compensation made by businesses and property
owners affected by the sinkhole. The claims received to date have been referred to
the insurer under the Project Agreement along with the Citys claim for
approximately $1.5M related to its costs arising from the sinkhole. RTG has also
incurred expenses associated with the cost of the remediation necessary to
stabilize and repair the site, as well as for the additional efforts that were necessary
to maintain the Project schedule. It is the Citys understanding that RTG will also be
referring these claims to the insurer under the Project Agreement.
Specifically, the Project insurance under the Project Agreement includes both the
City and RTG as named insureds. The Project insurance includes a waiver of
subrogation which prevents the insurer from pursuing a claim against a named
insured should the insurer ultimately determine that one name insured may be
responsible for the damage suffered by another named insured. This is the
insurance that responds to both the City and RTG claims and the deductible
amount under the Project insurance is $500,000 for an event such as the sinkhole.

In light of the above, the Projects Insurer may decide to conduct its own
investigation into the cause of the event as part of its review of the insurance
claims. As is the standard course for such matters, the City will not be commenting
on this matter until all of these claims are resolved so as to not prejudice the Citys
position in relation to either its insurance claim or any potential future litigation that
may arise from the sinkhole event. As noted earlier, in this regard, it is
recommended that the Citys Root Cause Analysis report, prepared by the external
experts, will remain confidential until that time. However, as indicated, should any
Member of Council wish to review the report, they may contact me directly to make
the necessary arrangements.
Finally, the Project Agreements construction schedule and associated milestone
payments were reordered and revised in accordance with the City Managers
delegated authority, as set out in the Council report from December 2012, based on
the remedial efforts to ensure the construction schedule is maintained. The
milestone payments which are a common feature of large-scale construction
projects are intended to compensate the contractor for the supply of labour and
materials necessary to complete discrete portions of the Project, and to ensure the
timely payment of subcontractors and financing costs. Recognizing that some
phases of the Project, such as the supply and assembly of the trains, have or will
be completed ahead of schedule, the City has been working with RTG, as well as
its Federal and Provincial funding partners, to equitably revise the milestone
payment schedule under the Project Agreement.
In closing, the year ahead is expected to be an important one for the Project that
will see the completion of the 2.5 km tunnel and the 13 stations along Stage 1 of
the Confederation Line take shape. Despite the challenges posed by the June
2016 sinkhole event, the combined efforts of the City and RTG mean that the
Project remains on track for revenue service in 2018.
I trust that the above-noted information is satisfactory. Members will continue to be
provided with additional updates as any new information is received.
M. Rick OConnor
City Clerk and Solicitor